Case Note & Summary
The matter arose from a sales tax assessment under the Rajasthan Sales Tax Act, 1954. The respondent-assessee, a partnership firm having its head office at Jodhpur, was appointed as agent by the State Trading Corporation of India to look after the import and sale of cement from Pakistan. The Sales Tax Officer, Jodhpur City, levied sales tax on a turnover of Rs. 23,92,252.75 np by an assessment order dated March 5, 1962. The assessee had claimed before the Sales Tax Officer that it was not liable to tax on this turnover because it was not a dealer within Section 2(f) of the Rajasthan Sales Tax Act and because the sales were in the course of import within Article 286(1)(b) of the Constitution. The Sales Tax Officer set out the facts relating to the second ground but did not discuss or decide the applicability of Article 286(1)(b); he assessed the turnover holding that the assessee was a dealer and had collected sales tax from buyers. The assessee then filed a writ petition under Article 226 in the Rajasthan High Court challenging the assessment order on the ground that the Sales Tax Officer had failed to consider Article 286(1)(b) and had wrongly held the assessee to be a dealer. The State raised a preliminary objection regarding maintainability on the ground of alternative remedy of appeal, but the High Court overruled it, holding that the petitioner had challenged jurisdiction under Article 286(1)(b) and that the principle in A.V. Venkatesweran v. Ramchand Sobhraj Wadwani applied. The High Court then dealt with the merits, held that the assessee was a dealer under Section 2(f) but that the sales had taken place in the course of import, and quashed the assessment order insofar as it levied tax on the disputed turnover. The State appealed to the Supreme Court by certificate. The Supreme Court held that the High Court should have declined to entertain the petition because no exceptional circumstances existed to warrant exercise of extraordinary jurisdiction under Article 226. It reiterated that Article 226 is not intended to convert High Courts into original or appellate assessing authorities whenever an assessee attacks an assessment order on the ground that a sale was made in the course of import. The Court observed that the question whether the cement was sold in the course of import depended on where property passed in each consignment and involved various facts, and that crucial facts had not been brought on record by the assessee, who bore the onus to prove that each railway receipt was endorsed before the consignment crossed the frontier. The Court also held that since the Sales Tax Officer had not dealt with the question under Article 286(1)(b), the assessment order should have been quashed on that ground and the case remanded to the Sales Tax Officer for fresh consideration. Accordingly, the Supreme Court set aside the High Court's judgment, directed that the assessment order be quashed for non-consideration of the constitutional claim, and remanded the matter to the Sales Tax Officer.
Headnote
A) Constitutional Law - Writ Jurisdiction - Alternative Remedy - Constitution of India, Article 226 - The High Court should not have entertained the writ petition because an appeal lay under the Rajasthan Sales Tax Act and no exceptional circumstances existed; writ jurisdiction is not meant to convert High Courts into original or appellate assessing authorities. Held that the assessee must exhaust statutory remedies unless something goes to the root of jurisdiction or causes palpable injustice (Paras 72-77). B) Constitutional Law - Sales Tax Exemption - Sale in Course of Import - Constitution of India, Article 286(1)(b) - Whether a sale took place in the course of import is a question of fact requiring examination of where property passed and whether the sale occasioned movement of goods; the High Court should not have decided this disputed question in writ proceedings but should have left it to the assessing authority. Held that the question of applicability of Article 286(1)(b) must be determined on facts by the Sales Tax Officer (Paras 72-77). C) Sales Tax Law - Assessment Order - Failure to Consider Constitutional Claim - Rajasthan Sales Tax Act, 1954, Section 2(f); Constitution of India, Article 286(1)(b) - The Sales Tax Officer did not discuss the assessee's claim under Article 286(1)(b) despite setting out facts; the proper course was to quash the assessment order on this ground and remand for fresh consideration. Held that the High Court erred in deciding the merits instead of remanding (Paras 72-77). D) Constitutional Law - Article 286(1)(b) - Course of Import and Onus of Proof - Constitution of India, Article 286(1)(b) - The assessee bears the onus to establish that the sales were in the course of import by proving relevant facts such as endorsement of railway receipts before goods crossed the frontier; absence of evidence on crucial facts precludes adjudication in writ proceedings. Held that disputed factual issues cannot be resolved by High Court under Article 226 (Paras 72-77).
Issue of Consideration
Whether the High Court should have entertained the writ petition under Article 226 when the assessee had an alternative remedy of appeal under the Rajasthan Sales Tax Act, and whether the disputed question whether the sales were in the course of import under Article 286(1)(b) of the Constitution should be decided in writ proceedings
Final Decision
The Supreme Court held that the High Court should have declined to entertain the writ petition and should not have decided the disputed questions of fact. It held that the assessment order should be quashed on the ground that the Sales Tax Officer had not dealt with the question under Article 286(1)(b) and the case should be remanded to the Sales Tax Officer for fresh consideration. The appeal was allowed accordingly.
Law Points
- High Court should not entertain writ petition under Article 226 when statutory appeal available and disputed questions of fact require determination
- whether sale occurred in course of import under Article 286(1)(b) is a question of fact for assessing authority
- writ jurisdiction not intended to convert High Courts into original or appellate assessing authorities
- assessee must exhaust statutory remedies unless exceptional circumstances like lack of jurisdiction or palpable injustice exist
- failure of Sales Tax Officer to consider constitutional claim justifies quashing of assessment and remand
- not High Court adjudication
